Christmas Caution: Some Gift Cards Can Be Expensive Cards

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To give your nephew $50 worth of buying power this holiday season, you may have to pay somewhere between $52 and $55.95.

And that's not all. You also may have to count on your nephew to use the card in a timely manner before additional fees are racked up, depending on from whom you purchase that gift card, according to one gift card vendor.

"Credit unions charge less fees and lower fees on these products just as they do on most other products and services they offer," noted Tim Kaliban of Certegy Card Services. "For a $50 gift card, a credit union typically will charge an issuance or origination fee of anywhere from $2 to $5.95."

That fee may be tiered based on the dollar amount of the card being purchased or based on what type of card is being bought and through which delivery channel. For example, an "instant issue" card that is sold right over the counter at a CU lobby generally has fewer costs associated with it than, say, a card that has been ordered over the Internet and has been personalized and then must be shipped, he explained.

In most cases, there is a "free period" on the card, typically six months to a year, where the recipient of the card can use the total value on the card before any additional fees kick in, then once that period is over, an inactivity fee may be applied. Such fees typically are around $2 or $2.50.

Some cards may allow the cardholder to call and check how much is left on the card, and there may be fees related to that, maybe at 25 cents or 50 cents per call, Kaliban estimated.

"The consumer has an expectation that a $100 card really has a $100 value on it," he said, noting that credit unions usually offer a "feasible amount of time" for a card recipient to use the funds before any additional fees are applied. "Credit unions are basing their fees on what it takes to support the program."

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